Highlights of GST developments

Chapter 1: Overview/Basic Concepts

The government proposes to increase the turnover threshold for ‘‘small business entities’’ from $2m to $10m, effective for income years from 2016/17 onwards (Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016) ¶1-250;¶1-260

Legislation was passed to give effect to new measures affecting cross-border supplies of services and intangibles, such as digital products, to Australian consumers. It will be effective from 1 July 2017 ¶4-100; ¶9-120

A new ‘‘connection with Australia’’ test applies from 1 October Guidelines on its operation were finalised (Law Companion Guideline LCG 2016/1) ¶4-100; ¶4-101; ¶4-102

Auction contract stating that the price was inclusive of GST was rectified to reflect the parties’ understanding that it was GST-exclusive (SAMM Properties) ¶4-210

Chapter 7: Accounting Basis/Tax Periods

The government proposes to increase the turnover threshold for ‘‘small business entities’’ from $2m to $10m, effective for income years from 2016/17 onwards (Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016) ¶7-300

In formal barter transactions, the consideration is received when the supplier’s account is credited (Taxology) ¶7-435

Chapter 8: GST Returns/The Bas/Payment/Assessment/Refunds

The Tax Office is testing a simpler BAS for small businesses from 1 July 2016, with a view to making it available for all small businesses from 1 July 2017; a simpler BAS for newly-registered small businesses also applies from 19 January 2017 ¶8-000

The government proposes to increase the turnover threshold for ‘‘small business entities’’ from $2m to $10m, effective for income years from 2016/17 onwards (Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016) ¶8-000;¶8-037

For 2016/17, the GDP adjustment factor used in calculating GST instalments is 2% ¶8-037

BAS agents will not be required to register as tax agents to provide specified services, including superannuation guarantee and contributions work ¶8-042

Chapter 9: Imports And Exports

A shortcut method may be used by importers in calculating transport, insurance, loading and handling fees ¶9-005

Revised GST rules apply where the supply of goods involves them being brought into Australia, and being installed or assembled here ¶9-020

An Exposure Draft of legislation to abolish the $1,000 exemption for low- value imports was released ¶9-030

The Tax Office has been conducting a general data matching program for online sales of goods and services with a total value of $12,000 or more ¶9-030

Legislation was passed to give effect to new measures affecting cross-border supplies of services and intangibles, such as digital products, to Australian consumers. It will be effective from 1 July 2017; provisional ATO guidelines were also released (Draft GST Ruling GSTR 2016/D1) ¶9-120

From 1 July 2017, simplified GST registration arrangements will be available for non-resident suppliers of inbound intangible consumer supplies ¶9-120

Repairs, renovations, modifications or treatments of goods carried out for a non-resident are GST-free where they are done to meet the non-resident’s obligations under a warranty ¶9-250

Chapter 10: Financial Supplies And Insurance

Supplies of bank accounts and superannuation interests by foreign financial institutions will be classed as financial supplies for tax periods starting on or after 1 July 2017 ¶10-010

The ATO considers that a sponsoring employer is not entitled to an input tax credit if a superannuation fund makes an acquisition (eg it receives legal advice) and the employer pays the expense (eg solicitors’ fees) on the fund’s behalf. However, the ATO considers that the fund itself may be able to claim a reduced input tax credit under the financial supply rules (GST Determination GSTD 2016/1) ¶10-080

Chapter 11: Real Estate/Accommodation/Sale Of Business

The non-profit status of strata title body corporates was clarified ¶11-200

Under a management agreement, a hotel owner appointed another party as the operator of the hotel, as agent of the The owner was held to taxable on the supply of accommodation as it was provided by it through its agent (Castan) ¶11-320

The requirements of a ‘‘fair and reasonable’’ apportionment of the consideration paid in retirement village developments were considered (Case 4/2016) ¶11-515

Chapter 12: Transport, Travel And Vehicles

The 2016/17 ‘‘car limit’’ used in calculating input tax credits is $57,581 ¶12-110

Chapter 16: Gambling, Second-Hand Goods And Other Measures

Offshore gambling supplies will be treated as being connected to Australia if the recipient is an Australian resident (from 1 July 2017) ¶16-000

Chapter 17: Gst Groups, Branches, Agents And Associates

The ATO issued guidelines on how the joint venture requirements will be applied to complex arrangements involving multiple joint ventures, as for example in the energy or resource industry (Practical Compliance Guideline PCG 2016/7) ¶17-200

A property management company lost its appeal against the decision in Crown Estates that it was not entitled to claim input tax credits in relation to its services to the owners ¶17-400

A non-resident and its resident agent may agree to opt out of the new rules on the GST treatment of cross-border business transactions (¶4-101), so that the resident agent continues to be liable for GST on the relevant supplies ¶17-410

Chapter 18: Administration/Audit/Review

Guidelines on the use of Law Companion Guidelines (LCGs) were LCGs are intended to provide insight into the practical implications of recently enacted law. These are normally treated in the same way as public rulings, unless otherwise specified (Law Companion Guideline LCG 2015/1 ¶18-030

Draft guidelines on the use of Practical Compliance Guidelines (PCGs) have been released. PCGs typically describe ATO compliance approaches to situations where the law is uncertain, or is creating a heavy administrative or compliance They are normally not treated as legally binding public rulings (Draft Practical Compliance Guideline PCG 2016/D1) ¶18-030

It is proposed that the Commissioner should be given a limited discretionary power to issue a legislative instrument modifying the effect of a taxation law, so as to ensure that it can be administered to achieve its intended purpose ¶18-030

There is now a formalised system for requiring certain third parties to report to the ATO on transactions that could reasonably be expected to have GST consequences for others ¶18-110

The protection that is provided by legal professional privilege is an immunity for the client against having to disclose the relevant information. On this basis, assessments based partly on information which had been provided to the ATO by a third party were held to be valid, even if the client itself could not have been compelled to provide that information (FC of T v Donoghue) ¶18-140

The rates of general interest charge were updated ¶18-300

Chapter 19: Contracts/Transitional Rules

Transitional rules cover the GST treatment of contracts spanning the 1 October 2016 starting date of new rules on cross-border supplies ¶19-250

Where a contract for the sale of land provided that GST was to be added if the words ‘‘plus GST’’ appeared in a box (as in the standard Law Institute of Victoria contract), it was not sufficient compliance if the single word ‘‘GST’’ appeared there (A & A Property Developers) ¶19-400

Chapter 20: Anti-Avoidance Rules

The Tax Office is investigating certain arrangements designed to avoid the application of GST in the distribution of intangible products and services into Australia (Taxpayer Alert TA 2016/8) ¶20-000

The Tax Office is conducting an ongoing investigation, including access visits without notice, into pre-insolvency advisors and their involvement in illegal ‘‘phoenix’’ activity ¶20-000

A heavily-discounted penalty of $180,000 was imposed on scheme promoters, after consideration of their already parlous financial situation (Ludekens) ¶20-130

Chapter 22: Wine Equalisation Tax

The practical application of the ‘‘half retail price method’’ in determining the taxable value of wine was considered in NZWINEIMPORTS ¶22-290

The government proposed changes to the eligibility criteria for the wine equalisation tax rebate to apply from 1 July The rebate cap will also be reduced to $350,000 ¶22-560

Chapter 23: Luxury Car Tax

A Bill was reintroduced to enable certain GST-registered public museums, public libraries and public art galleries to import or acquire certain cars free of luxury car tax ¶23-050